The Economics of Conflict, War and Peace

The Economics of Conflict, War and Peace

School of Economics,
Commerce Faculty
University of Cape Town

Honours Economics Option
Module Leader:Prof J Paul Dunne
Email: jpdbris 'at' gmail.com
Room: 4.19 Extension: 4953

Office hours: Tuesday 12.00 and Thursday 11.00

This page contains links to information in Adobe pdf format. If you do not have Adobe Acrobat Reader on your computer, download it from here

STOP PRESS:

Lectures start Tuesday 24th July 09.00 in LT1

Deadline for project titles 17th August

Background Reading
The following give a useful overview:

Smith D and R Smith (1983) The Economics of Militarism. Pluto Press, London. Dated but excellent brief introduction

Smith, Ron P "Military Economics", Palgrave, 2009, an excellent nontechnical overview

Anderton, Charles H and John R Carter, "Principles of Conflict Economics", Cambridge University Press, 2009. Textbook

Enders, Walter and Todd Sandler "The Political Economy of Terrorism", Cambridge University Press, 2006. Textbook

Sandler, Todd and Keith Hartley, "The Economics of Defense" Cambridge University Press, 1995.Textbook

Collier, Paul, 2007 "The Bottom Billion" Oxford University Press.

Collier, Paul, 2009" Wars, Guns, and Votes", Vintage (UK).

The Economics of Peace and Security Journal (www.epsjournal.org.uk).

Session 1: Introduction:

Lecture notes here
Reading:

Coulomb, F and Dunne, P. "Economics, Conflict and War", Real-World Economics Review. Issue no. 46, 20 May 2008, pp 147-157. With Fanny Coulomb. Available here

Dunne, P. and F. Coulomb"Peace, War and International Security: Economic Theories", Chapter in Jacques Fontanel and Manas Chatterji (eds) Peace, War and International Security. Elsevier: Holland. With Fanny Coulomb. Version available here

Smith, R. (2009). Military Economics. New York: Palgrave Macmillan [draft typescript] [chap. 1] [here]

Anderton/Carter (2009). Principles of Conflict Economics. [ chapter 1; chapter 2]

Class: General discussion, planning projects and future classes

Session 2: Military Spending and the Economy:

Lecture notes here
Reading:
- Dunne, J Paul, Ron Smith and Dirk Willenbockel."Models of Military Expenditure and Growth: A Critical Review". Defence and Peace Economics, 2005, Vol. 16, No. 6, pp. 449 - 461. UWE Discussion Paper version here
- Dunne P (1990) The Political Economy of Military Expenditure: an introduction, Cambridge Journal of Economics, Vol 14, no 4, pp 395-404.
- Smith R (1977) Military Expenditure and Capitalism. Cambridge Journal of Economics, Vol 1, pp 61-76. Also a reply to comments in CJE (1978)
- Pivetti M (1992) "Military Spending as a Burden on Growth: An 'Underconsumptionist' Critique", Cambridge Journal of Economics, 16, 373-84.
- Smith R and Dunne P (1994) "Is Military Spending A Burden: A Marxo-Marginalist Response to Pivetti", Cambridge Journal of Economics, 18, 515-527.
- Baran P and Sweezy P (1966) Monopoly Capital, London, Monthly Review Press.
- Howard MC and J King (1992) "A History of Marxian Economics: VolII, 1929-90", Macmillan. Ch 8.
- Smith, R. (2009). Military Economics. New York: Palgrave Macmillan [draft typescript] [chap. 2] [here]
- Anderton/Carter (2009). Principles of Conflict Economics. [ chapter 10; chapter 11]

Class: "Theoretically, military spending has clear benefits to economies" Discuss.

Session 3: Military Expenditure, Growth and Development

Lecture notes are here
Readings:
- Dunne, J Paul and Mehmet Uye."Military Spending and Development". Chapter in Tan, Andrew (ed) (2010) The Global Arms Trade. Europa / Routledge (London) pp 293305-292. Version available here
- Dunne, Paul (1996)"Economic Effects of Miltary Spending in LDCs: A Survey", Chapter 23 in Nils Petter Gleditsch, Adne Cappelen, Olav Bjerkholt, Ron Smith and Paul Dunne (eds) (1996) "The Peace Dividend", North Holland, pp 439-464. Draft here
- Ram, Rati (1995), Defense Expenditure and Economic Growth', Chapter 10 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam).
- Deger, Saadet adn Somnath Sen (1995), Military Expenditure and Developing Countries', Chapter 11 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam).
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 8: Economic Choices here
- Smith D and R Smith (1983) The Economics of Militarism. Pluto Press, London.
- Brauer, Jurgen and J Paul Dunne (eds) 2002. Arming the South: The Economics of Military Expenditures, Arms Production and Trade in Developing Countries. Palgrave, April. ISBN: 0-333-75440-9. Chapter 9, "The Arms Industry in Developing Nations: History and Post-Cold War Assessment", by Jurgen Brauer here
Also watch:
- Paul Collier’s lecture to the Royal Economic Society (video) on War and Peace in Africa is here]

Class "Military spending will invariably aid development" Discuss.

Session 4: The Determinants of Military Spending:

Lecture notes are here
Reading:
- Smith, R.P. (1995), The demand for military expenditure', Chapter 4 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam) 69-87.
- Collier, P. and Hoeffler, A. (2007),Unintended Consequences: Does Aid Promote Arms Races?, Oxford Bulletin of Economics and Satistics, 69, 1, pp1-27. here
- Dunne, JP and Perlo-Freeman, S (2003a) "The Demand for Military Spending in Developing Countries". International Review of Applied Economics, Vol. 17, no. 1, 2003, pp. 23-48. here
- Rosh, R. M. (1988): 'Third World Militarisation: Security Webs and the States they Ensnare', Journal of Conflict Resolution vol.32 no.4, pp 671-698.
- Batchelor, Peter, Paul Dunne and Guy Lamb. ISSN 0022-3433 "The Demand for Military Spending in South Africa", Journal of Peace Research. Vol. 39, No. 3, 2002, pp. 315-330. here
- Smith, R. (2009). Military Economics. New York: Palgrave Macmillan [draft typescript] [chap. 4] [here]

Class "Military Spending can only be explained by strategic needs" Discuss.

Session 5: The Determinants Conflict:

Lecture notes are here
Reading:
- Blattman, Christopher and Edward Niguel. Civil War. Journal of Economic Literature, 2010, 48:1, pp3-57. [here]
- Rigterink, Anouk S.. 2010. Natural resources and civil conflict: an overview of controversies, consensus and channels Vol 5, No 2 - Symposium on natural resources, political economy, and conflict, July 2010 here
- Paul Collier & Anke Hoeffler, 2004. "Greed and grievance in civil war," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 563-595, October [here]
- Collier, P. and Hoeffler, A. (1998) On economic causes of civil war, Oxford Economic Papers, 50, 563-73.[here]
- Collier, P., Elliot, VL, Hegre, H, Hoeffler, A, Reynal-Querol, M and Sambanis, N (2003) "Breaking the Conflict Trap: Civil War and Development Policy", OUP for the World Bank; New York. [here]
- Fearon, James D. and David D. Laitin (2003). Ethnicity, Insurgency, and Civil War. American Political Science Review, 97, pp 75-90 [here]
- Anderton/Carter (2009). Principles of Conflict Economics. [ chapter 5; chapter 6; chapter 7; chapter 9]
- Sambanis (2002), A review of recent advances and future directions in the quantitative literature on civil war, Defence and Peace Economics, 13(3), 215-243.2002 here
- Collier,Paul, Anke Hoeffler and Dominic Rohner (2009) Beyond greed and grievance: feasibility and civil war. Oxford Economic Papers 61 , 1-27 here

Class "Intrastate conflict is always to do with greed rather than grievance" Discuss.

Session 6: The Consequences of violent conflict:

Lecture notes are here
Reading:

- Dunne, J Paul (2012) "Armed Conflicts" Forthcoming in edited collection by Bjorn Lomborg Cambridge University Press for Copenhagen Consensus, 2012. Draft here
- de Groot, Olaf J., Tilman Brück and Carlos Bozzoli, 2009. How Many Bucks in a Bang: On the Estimation of the Economic Costs of ConflictDIW Discussion Papers N° 948, November 2009 here
- Blattman, Christopher and Edward Niguel. Civil War. Journal of Economic Literature, 2010, 48:1, pp3-57. [here] section 3
- Collier,Paul (1999) On the economic consequences of civil war. Oxford Economic Papers 51 , 168-183 [here]
- Murdoch, J. and T. Sandler (2002). “Civil Wars and Economic Growth: A Regional Comparison.” Defence and Peace Economics 13(6):451-464. [here]
- Brauer, J. (forthcoming). “Environmental Consequences of War,” in N. Young, ed. The International Encyclopedia of Peace. New York: Oxford University Press. [here]
- Brauer, Jurgen and Paul Dunne "Macroeconomics and Violence", forthcoming 2010 as Chapter 14 in Derek Braddon and Keith Hartley (eds) Handbook on the Economics of Conflict. Cheltenham, UK: Elgar. here.
- Salehyan, Idean and Kristian Gleditsch (200). “Refugees and the spread of civil war.” International Organisation 60 :335-366. [here]
- Anderton/Carter (2009). Principles of Conflict Economics. [ chapter 7; chapter 12] [textbook]
-Stewart, Frances et al (2001) War and Underdevelopment, Oxford University Press
-See the cost to the US of the wars in Iraq and Afghanistan here and more general here

Class "Costs of conflict are obvious, the casualties" Discuss

Session 7: Post Conflict Reconstruction.

Lecture notes are here
Readings:
- Paul Dunne "After the Slaughter: Reconstructing Mozambique and Rwanda" Economics of Peace and Security Journal, Vol. 1 No. 2, June 2006. Here
- Bassam Yousif "Economic aspects of peacekeeping in Iraq:what went wrong?", Economics of Peace and Security Journal,Vol. 1 No. 2, June 2006. Here
- Christopher Coyne "Deconstructing reconstruction: the overlooked challenges of military occupation", Economics of Peace and Security Journal,Vol. 1 No. 2, June 2006. Here
- Harris, Geoff (1999) Recovery from Armed Conflict in Developing Countries. Routledge.
- African Development Bank, 2008/2009. African Development Report "Conflict Resolution, Peace and Reconstruction in Africa". here
- UNDP, 2008. Post Conflict Economic Recovery. here
- Paul Collier's lecture on War and Peace in Africa here and his book "The Bottom Billion" [chap. 2; chap. 8] Oxford University Press.
- Brauer, Jurgen and Paul Dunne "Macroeconomics and Violence", forthcoming 2010 as Chapter 14 in Derek Braddon and Keith Hartley (eds) Handbook on the Economics of Conflict. Cheltenham, UK: Elgar. here
- World Bank, 2011. "World Development Report 2011" Conflict, Security and Development". here
- There are other useful papers in EPSJ vol 1.2 here

Class: "Post conflict reconstruction is just about economic liberalisation" Discuss.

Session 8: Producing the means of destruction

Lecture notes are here
Readings:
- Dunne, J Paul and Elisabeth Skons, 2010."Military Industrial Complex". Chapter in Tan, Andrew (ed) (2010) The Global Arms Trade. Europa / Routledge (London), pp 281-292. Version available here
- Poast, Paul (2006) "The Economics of War", Mc Graw-Hill. Chapter 5.
- Dunne, J Paul and Eamon Surry."Arms Production" Chapter 9 in Stockholm International Peace Research Institute (SIPRI) Yearbook, 2006. Draft here tables here
- Dunne, J Paul and Elisabeth Skons,"Arms Production, Economics of". Chapter in Lester Kurtz (ed) Encyclopaedia of Violence, Peace and Conflict, 2nd edition. Elsevier. Draft here
- Dunne, J Paul. Paper on Sector Futures: Defence Industry prepared with Cambridge Econometrics for European Monitoring Centre on Change, can be found here
- Dunne, J Paul, Maria Garcia-Alonso, Paul Levine and Ron Smith"The Evolution of the International Arms Industries", in Wolfram Elsner(ed)(2007) Arms, War, and Terrorism in the Global Economy Today -Economic Analyses and Civilian Alternatives. ISBN 3-8258-0045-8. here
- Dunne, J Paul (1995), The Defense Industrial Base', Chapter 14 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam).
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 5 here Chapter 6 here

Class: "The arms industry is similar to other globalised industries" Discuss.

Session 9: The Arms Trade and Offsets

Lecture notes are here
Readings:
- Anderton, Charles H (1995), Economics of Arms Trade', Chapter 18 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam).
- Poast, Paul (2006) "The Economics of War", Mc Graw-Hill. Chapter 5.
- Kapstein, Ethan B (1992) "The political Economy of National Security", Mc Graw Hill, Ch 4,5
- Dunne, J Paul and Sam Perlo-Freeman."The Impact of a Responsible Arms Control Policy on the UK Economy" Report prepared for Oxfam, for their Control Arms campaign, 2003. Mimeo, School of Economics, University of the West of England. Available here
- Malcolm Chalmers, Neil V. Davies, Keith Hartley and Chris Wilkison (2002) The economic costs and benefits of UK defence exports. Fiscal Studies Volume 23, Issue 3, pages 343-367, September 2002 here - Anthony Sampson (1991) The Arms Bazaar, Coronet books.
- Smith, Ron (2009) "Military Economics", Macmillan. Chapter 6 here
- Some useful background here and here and here

Offsets Readings:
- Brauer, J. and J.P. Dunne (2005). “Arms Trade Offsets and Development.” Africanus [South Africa] 35(1):14-24. [here]
- J Paul Dunne and Guy Lamb."Defence Industrial Participation: The Experience of South Africa", Chapter 19 in Jurgen Brauer and Paul Dunne (eds) Arms Trade and Economic Development: Theory Policy and Cases in Arms trade Offsets, Routledge, September 2004. Draft here

Backround: and a few laughs
Mark Thomas (2006) "As Used on the Famous Nelson Mandela: Underground Adventures in the Arms and Torture Trade", Ebury Press
Mark Thomas "UK Arms Trade" video
Yes Minister Arms trade, terrorism and politics

Class: " The arms trade is driven by the same forces as any other trade and is just as valuable" Discuss.

Session 10: The Economics of terrorism

Lecture notes are here
Readings:
- Llussá, Fernanda and José Tavares, The economics of terrorism: a synopsis, The Economics of Peace and Security Journal, p. 62 www.epsjournal.org.uk, Vol. 2, No. 1 (2007) here
- Enders, Walter and Todd Sandler(1995), Terrorism: Theory and Applications, Chapter 9 in: K. Hartley and T. Sandler, eds., Handbook of Defense Economics, vol. 1 (North Holland, Amsterdam).
- Enders, Walter and Todd Sandler (2006) The Political Economy of Terrorism. Cambridge University Press.
- Anderton, Charles H and John R Carter, "Principles of Conflict Economics", Cambridge University Press, 2009.
- Background: video by Loretta Napoleoni here

Class: "Terrorism is understandable in economic terms" Discuss.

Session 11: Project presentations

Assessment

Assessment will be by means of a 3 hour unseen exam and a group project. Examples of potential topics for the research project:

Economic determinants of terrorism;
Violent, armed conflict is mostly about genuine political grievance, not about greed;
Military expenditures are determined by economic rather than strategic factors;
Economic effects of military spending in Africa
Military industrial complexes in developing economies
Measuring the costs of conflict in Africa
Post conflict reconstruction and economic policy in Africa
Economics of the arms trade in Africa
The economics of South Africa's arms deal.

Determine a question or hypothesis and examine it in detail. Preferably use data and focus on Africa.

Previous projects included:

Diamonds and their Effect on the Probability of Conflict in African States
Post Conflict Reconstruction and Economic Policy: A Case Study of the DRC
Determinants of military Spending in South Africa.
Post Conflict Reconstruction in Angola and Mozambique
Determinants of Intrastate Conflict: SSA 1990-2008
Military Spending and Economic Growth: Algeria, Angola, Morocco, Nigeria and South Africa

Deadline for title: 9am Friday 17th August, 2011.
Word limit is 5,000 words. One of the questions in the unseen exam will be on the project.
Deadline for submission: 24th October, 2011.
You will need to provide a 'hard' and 'soft' copy of your work.
The exam will be 3 hours long and you will answer 4 questions, one of which will be compulsory and about your project.
A mock exam paper is available here

There are some old lecture notes on the Economics of Military Spending that you might find useful here

Some data sources:

Costs of War

World Bank

IMF International Monetary Fund

SIPRI Stockholm International Peace research Institute

IISS International Institute for Strategic Studies

WMEAT

Small Arms Small Arms Survey

COW Correlates of War

PRIO Conflict Peace Research Institute Oslo

UCDP Uppsala Conflict Data Programme